Pierce Control Systems Case

8. If a company has $181,000 in total liabilities and $225,000 in total assets, what percentage of total assets is being financed with the use of other people’s money? 80.4 (http://www.cliffsnotes.com/study_guide/Ratio-Analysis.topicArticleId-21248,articleId-21213.html)

(d) $1 billion 10 year debenture @ 7.5% with 18.18 warrants at $ 55 exercisable until 1988.

The company has an agreement with a bank that allows the company to borrow the exact amount needed at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. At the end of the quarter, the company will pay the bank all of the accrued interest on the loan and as much of the loan as possible while still retaining at least $50,000 in cash.

E. Cindy and Rob estimate that the market value of the common equity in the venture is $900,000 at the end of 2010. The market values of interest-bearing debt are judged to be the same as the recorded book values at the end of 2010. Estimate the market value-based weighted average cost of capital for Castillo Products.

b. What is the total balance of Jessie Robinson 's revolving account? (0.5 points) N/A

In addition, he needs to borrow $173.5 at the risk-free borrowing rate of RF,b . The

Commercial Capital Corporation is the leasing subsidiary of a major regional bank and offers a lease at 12.75 million per year for 4 years. The first payment is due upon delivery and installation. The rest of the payments are due each subsequent year at the beginning of the year. This cost includes the same service contract as what would have been obtained with purchase.

9. You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you needed a 14% return to make this deal?

2. Forecast the firm’s financial statements for 2002 and 2003. What will be the external financing requirements of the firm in those years? Can the firm repay its loan within a reasonable period? In order to forecast the financial statements of 2002 and 2003, the following assumptions need to be made. The growth of sales is 15%, same as 2001, which is estimated by managers. The rate of production costs and expenses per sales is constant to 50%. Administration and selling expenses is the average of last 4 years. The depreciation is $7.8 million per year, which is calculated by $54.6 million divided by 7 years. Tax rate is 24.5%, which is provided. The dividend is $2 million per year only when the company makes profits. Therefore, we assume that there will be no dividend in 2003. Gross PPE will be $27.3 million (54.6/2) per year. We also assume there is no more long term debt, because any funds need in the case are short term debt, it keeps at $18.2 million. According to the forecast, Star River needs external financing approximately $94 million and $107 million in 2002 and 2003, respectively. In order to analysis if the company can repay the debt, we need to know the interest coverage ratio, current ratio and D/E ratio. The interest coverage ratios through the forecast were 1.23 and 0.87 respectively, which is the danger signal to the managers, because in 2003, the profits even not

The third scenario involves the same $100 million borrowing capacity:, only each draw does not have its own maturity date specified.  Instead, whatever outstanding balance remaining is due by the end of the three-year credit line term, or December 31, 2012.  The first draw is made on June 30, 2010, in the amount of $70 million.  Another draw for $15 million is made on September 30 of the same year, followed by another draw for $15 million on November 30.  The only repayment made by Buck is that made on December 15, 2010, in the amount of $50 million.

9. Debt service coverage = (Net Income + Interest + Depreciation) in Statement of Operations/ Interest + Principal Payments ($10 million assumed for this assignment)

When Ross submitted his bid of $75/share, Henry Kravis took a look at the bid and knew that Ross put in a low ball offer. Kravis countered the offer and submitted $90/share. But the offer would not last long, Kravis knew that Ross was going to submit a higher bid and need to prepare a higher offer. The problem was what is the highest offer Kravis can submit and quickly pay off the debts.

The Standard Oil Company of California(Socal) is trying to determine how much to bid on the Gulf Oil Corporation. George Keller, the CEO of Socal, would need to borrow 14 billion dollars in order to make a substantial bid. While banks are willing to lend the money because of Socal's low to debt ratio, the loan would put the company in a highly leveraged position. In order to alleviate that debt, some of Gulf's assets could be sold. Keller has to consider the value of Gulf's exploration and development program when calculating future returns. Two billion dollars were being spent on the exploration and development program. This money could instead be used to reduce the debt if Socal acquired the company. However, the exploration program

Upon estimating the External Financing Need, the number showed a need of $99540. However the company took a loan of 250 000

Calculate the level of working capital for Dell for the years 1994, 1995 and 1996. (Please show the full calculation and formula’s used)